Does Berlusconi Want to Turn Italy Into Greece?

By Marc Champion -
Dec 6, 2012

You have got to ask: Wasn't former Italian Prime Minister Silvio Berlusconi paying attention when Antonis Samaras toppled the technocratic government in Greece, forced early elections and triggered six months of political chaos and economic destruction?

If Berlusconi was watching this year's Greek tragedy unfold, then he must have liked what he saw because today he withdrew support from Prime Minister Mario Monti's government and announced that "We can't go on like this." He blamed Monti's tightened fiscal policies for Italy's recession. The implied threat to topple Monti and force early elections was clear.

Then again, given the 76-year old's love of "Bunga Bunga" parties, maybe he was distracted. Berlusconi surely doesn't think that he can follow Samaras in pulling a political victory for himself and his People of Liberty party from the wreckage. The party is trailing a comedian, Beppe Grillo, in opinion polls and has no chance of catching the center-left Democratic Party.

The depressing part here is that Berlusconi may not even mean to carry through with his threat. This morning's brinksmanship may be designed solely to consolidate Berlusconi's control over his own fractured party. In anyone else, that level of self-interest and political irresponsibility would beggar belief. The prospect of Monti stepping down and Berlusconi returning to center stage drove 10-year Italian bond yields up by 0.1 percent by mid-afternoon, the biggest increase in three months.

Small wonder -- When Monti took over from Berlusconi just over a year ago, yields were around 7 percent, i.e. unsustainable.

Elections are coming in April anyhow, but let's hope Monti doesn't decide he has to fire his development minister, Corrado Passera, to persuade Berlusconi to keep the government afloat for a few more months. Passera may have provided the trigger for Berlusconi to have his party abstain from today's vote on economic measures, when he spoke out against Berlusconi bidding for the prime minister's post again.

"Anything that will make the rest of the world and our partners think that we would be turning back is not good for Italy," Passera said. That is as unimpeachably true as it was politely stated.

(Marc Champion is a member of Bloomberg View's editorial board. Follow him on Twitter.)